Saturday, November 10, 2012

The Case Against Raising Taxes

As both the Republicans in Congress and Socialist President Obama deal with the Fiscal Cliff, Obama clings to his Class Warfare argument to raise taxes on the "rich", families and small businesses earning more than $250,000 a year. The Republicans in the House and Senate should just say NO because it is a dumb idea. First, assuming raising taxes on anyone would not retard economic growth, which it will, raising taxes on the "rich" that already paying most of the income taxes in the United States will only bring in about $70 Billion over ten years. This is drop in the bucket when Obama is borrowing and spending more than a Trillion dollars each year, more than we take in, adding to our $16 Trillion National Debt.

Obama claims this "balanced" approach is necessary because of badly needed spending cuts that will impact students, Seniors and the poor, most of whom pay no income taxes at all. But, Obama's thinking once again is flawed. This Blogger has been in the belly of the beast, Washington DC, many times. I encourage everyone to visit our nation's Capital because it is a beautiful city we can all be proud of. However, once there, you will see block after block of agencies, commissions and departments, filled with bureaucrats earning 40% more than what is common in the private sector for like work, that demonstrate the size of the federal government. You will also see the many Associations and Lobbyists on K street, all feeding at the trough, in business to milk the federal government and American taxes payers like milking a cow every day.

Before we have to raise taxes on anyone, or cut spending on students, Seniors, or the poor, how about if we eliminate redundant programs, agencies, commissions and departments by cutting 500,000 federal civilian employees, out of the current 2.65 million, through normal attrition. We have got to cut the waste, fraud and abuse that exists at all levels of government before confiscating even more money from hard working people.

Next, rather than raising tax rates on anyone, we should get rid of all the deductions, except the charitable deduction, exclusions and gimmicks in the personal income tax code that distort buying and selling decisions and the economy. While the mortgage deduction perhaps made sense to encourage home ownership, it just results in higher prices for homes since the after tax mortgage payment is always figured into the purchase price. Phase the mortgage deduction out over time to give people and the market time to adjust.

It might be OK to raise the tax on Dividends and Capital Gains to 20% from the current 15%; but doing more will cause a crash in the stock market and be bad for job growth. We are already seeing the stock market go down as a result of Obama's election and fear of new taxes and regulations that will kill jobs. The US Corporate Income tax rate, at 35%, is the highest in the world. This is causing companies to push more jobs overseas. Rather than imposing any kind of punishment on global companies, Obama's Socialist Scheme that will lead to a trade war, we should lower corporate income taxes to no more than 20%, again by getting rid of various deductions, exclusion and gimmicks in the tax code.

It is time for common sense related to our tax system in the United States not silly Socialist, feel good ideology. We need to have a fairer, flatter tax code that encourages growth, not one that is a job killer. Hopefully, in dealing with the Fiscal Cliff and or shortly thereafter in 2013, which is projected to be a lousy year because of Obama's reelection, Republicans and Socialists, including the President, will come together to do what is best for all Americans.